Indications of a measured interest rate hike from the US Federal Reserve and the $1.9 billion investment by GQG Partners in four Adani group firms lifted investor sentiment and drove a nearly 900-point surge in the benchmark Sensex on Friday.

The sharp rally resulted in market capitalisation rising Rs 3.43 lakh crore on the BSE. Domestic institutions and retail investors offered strong support to stocks. But foreign portfolio investors (FPIs) made net purchases of only Rs 246 crore.

Equity markets across Europe and Asia ended in the green buoyed by comments by US Federal Reserve Atlanta president Raphael Bostic who said he favoured a slow and steady 25-basis-points rate increases to prevent a major knock on the US economy. It led to the Dow Jones Industrial Average ending nearly 342 points higher to close at 33003.57 on Thursday.

Back home, the investment made by GQG Partners in four Adani firms contributed to spirited buying as investors felt that it could help stabilise the group stocks and enable them to raise more capital ahead. GQG’s purchase allayed fears over the domestic banking sector’s exposure to the conglomerate.

“The market had more reasons to cheer today than to worry about concerns regarding inflation. PSU banks led the sectoral rally as reports of foreign investments in Adani stocks helped the sector in recouping the dampened sentiment,’’ Vinod Nair, head of research at Geojit Financial Services, said.

The 30-share BSE Sensex which opened on a higher note at 59241.20 rose 1057.69 points to hit the day’s high of 59967.04. It ended at 59808.97, a rise of 899.62 points or 1.53 per cent. At the NSE, the broader Nifty 50 ended at 17594.35, a gain of 272.45 points or 1.57 per cent.

In the Sensex pack, State Bank of India led the gainers list as it rallied 5.11 per cent.

Re up 63p

The rupee appreciated 63 paise to close at a one-month high of 81.96 against the dollar, lifted by the GQG investments in Adani and a strong PMI services data.

At the inter-bank forex market, the domestic currency opened higher at 82.24 against the previous close of 82.59 and rallied past the 81 mark to close at 81.96 against the dollar. During intra-day trades, the unit hit a high of 81.92.

900-point rise

■ Fed Atlanta chief says he prefers 25 basis point rate hike

■ GQG investment in Adani lifts sentiment

■ Services PMI lifts mood

■ Rupee up 63 paise